State-Owned Shareholder Governance and Financial Asset Allocation in Private Enterprises

The widening divergence between a stagnating real economy and surging financial investment has prompted renewed academic scrutiny of non-financial firms’ financialization. Amid deepening state-private capital integration, this study examines how state-owned shareholder governance shapes financial asset allocation among China’s private A-share listed firms from 2014 to 2023. The findings indicate a significantly positive effect, primarily driven by a precautionary savings motive. This effect is particularly pronounced under weaker regional institutions or during monetary tightening. Mechanism analyses identify two underlying channels—alleviating financing constraints and improving access to trade credit—while further analysis identifies significant moderating effects of bank monitoring intensity and corporate business strategy. By elucidating these boundary conditions and mechanisms, this study extends the existing literature on state governance and capital allocation, while providing policy guidance on refocusing finance toward real economic growth.